02390cam a22002537 4500001000700000003000500007005001700012008004100029100002000070245011000090260006600200490004200266500001600308520134800324530006101672538007201733538003601805690008101841700002001922710004201942830007701984856003802061856003702099w11279NBER20180222001627.0180222s2005 mau||||fs|||| 000 0 eng d1 aDahl, Gordon B.14aThe Impact of Family Income on Child Achievementh[electronic resource] /cGordon B. Dahl, Lance Lochner. aCambridge, Mass.bNational Bureau of Economic Researchc2005.1 aNBER working paper seriesvno. w11279 aApril 2005.3 aUnderstanding the consequences of growing up poor for a child's well-being is an important research question, but one that is difficult to answer due to the potential endogeneity of family income. Past estimates of the effect of family income on child development have often been plagued by omitted variable bias and measurement error. In this paper, we use a fixed effect instrumental variables strategy to estimate the causal effect of income on children's math and reading achievement. Our primary source of identification comes from the large, non-linear changes in the Earned Income Tax Credit (EITC) over the last two decades. The largest of these changes increased family income by as much as 20%, or approximately $2,100. Using a panel of over 6,000 children matched to their mothers from National Longitudinal Survey of Youth datasets allows us to address problems associated with unobserved heterogeneity and endogenous transitory income shocks as well as measurement error in income. Our baseline estimates imply that a $1,000 increase in income raises math test scores by 2.1% and reading test scores by 3.6% of a standard deviation. The results are even stronger when looking at children from disadvantaged families who are affected most by the large changes in the EITC, and are robust to a variety of alternative specifications. aHardcopy version available to institutional subscribers. aSystem requirements: Adobe [Acrobat] Reader required for PDF files. aMode of access: World Wide Web. 7aI3 - Welfare, Well-Being, and Poverty2Journal of Economic Literature class.1 aLochner, Lance.2 aNational Bureau of Economic Research. 0aWorking Paper Series (National Bureau of Economic Research)vno. w11279.4 uhttp://www.nber.org/papers/w1127941uhttp://dx.doi.org/10.3386/w11279